A Tale Of Two Studies: Can File Sharing Both Harm And Help Sales?

from the why,-yes dept

In part one of this series, we looked at a study that suggested that file sharing (mainly via Megaupload) likely harmed the sale and rental of digital movies. In part two, we looked at a study that suggested that file sharing of music (across many sites) likely helped the sale of digital music. So is one right and the other one wrong? Not necessarily. It's possible both are correct. Unlike some other studies we've seen, the methodologies used by both studies appear to be fundamentally sound, without any obvious problems. As with just about any study, both studies correctly note that there is the possibility of unknown or unexplained variables impacting the data. However, both run through a series of tests to try to eliminate a number of possible outside variables, and both come out with results that suggest their initial arguments are robust.

So, let's try to look at why the two studies might both be right -- and what that might actually mean. First off, there's the obvious difference: the first study was about movies, and the second study was about music. While there are obvious similarities between the two, there are also significant differences, which may also lead to differences in consumption. Movies, for example, tend to involve more initial commitment, since it takes a lot more time to watch a movie. Music can be consumed much more easily. But, for music that people like, they're much more likely to listen to it over and over again, whereas most people will view a movie only once. Even for movies that people absolutely love, they're likely to consume it many fewer times than corresponding music that people love. And, on top of that, movies come together as a whole package. Music, for the past few decades, was packaged as a bundle of songs, in the form of an album. However, the rise of digital distribution for music has often broken apart that bundle, such that people focus on the single unit of the song, rather than the album.

In those differences are the seeds of why these two studies could both make sense. The recording industry, obviously, points to the massive decline in overall revenue from recorded music sales. That is indisputable. But, much of that can be explained by the breakup of the album into single song sales. When you're no longer forced to purchase 10 songs you don't care about just to get to the 2 you do, it shouldn't be any surprise that overall sales revenue may decrease. At the same time, because people can then spread their interest across more artists, something like file sharing can still increase digital distribution sales, because they sample via unauthorized sites, and then purchase a few songs from those they like best. The file sharing acts as a way to figure out where they want to spend their money, but because they can spend less to get more, overall sales dropped off. The market is much more efficient.

Movies, on the other hand, are somewhat different. There isn't a great unbundling happening there. And, often, consuming movies is done for a different reason and in a different manner than consuming music. Watching a movie is a way to "kill" an evening. Need something to do? "Let's watch a movie." As such, you'd expect movie watching behavior to remain more consistent, as people have the same "void" to fill at a regular interval. And, while alternatives (such as surfing the internet or playing video games) may fill that void, some percentage of the people will prefer movies -- and if one source of movies goes away, they will look for others, and some percentage of those are likely to switch to a pay service.

There's one other factor that may impact all of this as well, as hinted at in the post about the first study: the level of development of legal services. For years, we've seen one thing that is almost certainly true: when there are no legal services available, the amount of unauthorized use increases. Unauthorized use is almost always an indicator of an under-served audience. And, if you look the development of online music and movie offerings, authorized music services tend to be a lot further along in creating compelling, user-friendly offerings that people find to be "better than piracy." There are some movie services that are getting there, but movie services are more likely to be encumbered with DRM and annoying restrictions (e.g. "watch the whole thing in 24 hours or you lose it!").

If anything, this final point is the most compelling explanation to me for the different results in the two studies -- and why I'm less confident that the results of the first study will hold up in the long term, unless Hollywood finally allows the creation of more user-friendly online movie services (i.e., lower prices and less restrictions, which is where the music services have all gone). In the music world, more and more people are making the gradual shift to authorized services, because they really do provide a good overall experience. The file sharing that goes on tends to be complementary to all of this because it is one way that people can further sample and figure out what they like, which they can then support within an authorized context (especially since music people like is played repeatedly).

With movies, on the other hand, you have less of a need to "sample," since the product is often watched just once. And there, convenience becomes king. People will flock to the most convenient offering (convenience being a combination of a variety of factors, which may differ per each individual, but generally include elements of ease of use, pricing, overall selection of movies, ability to view in multiple places, ability to watch at different times, etc.) For many, Megaupload represented the most convenient offering, and after that went away, other services, sometimes pay services, represented the "next best option." But, those other services are still at risk of newer more convenient services re-emerging and taking back those movie-watchers.

In those cases, both studies "make sense," but the lessons they suggest may be somewhat different than the lessons put forth by the supporters of the studies. The authors and supporters of the MPAA study suggest that this proves that shutting down unauthorized sites is a reasonable goal. I think that may be looking too narrowly at the results, and discounting how much people are focused on the "most convenient" solution. An even better solution is to provide more convenient offerings, which would win over customers from unauthorized sites even if they aren't taken down.

Finally, I wanted to respond to the IFPI, which appeared to completely freak out about the European Commission study, claiming it was flawed:

IFPI believes the JRC study is flawed and misleading. The findings seem disconnected from
commercial reality, are based on a limited view of the market and are contradicted by a large
volume of alternative third party research that confirms the negative impact of piracy on the
legitimate music business.

The IFPI seems to be responding based on emotion, rather than fact, and possibly a misunderstanding of the data. The data directly supports the commercial reality, which is that digital music sales have been regularly increasing, which the IFPI itself records quite clearly. The decrease in overall recording industry revenue (the IFPI is misleading in talking about "the legitimate music business" because they really only mean the portion that is recorded music sales), comes from the decline in the sale of physical music: CDs. And the study only looked directly at digital distribution, not the impact on CD sales. The other studies that the IFPI refer to look at the connection between file sharing and CD sales, showing a general decline there, but much of that may just be from people shifting from physical (inefficient and wasteful) distribution to digital (efficient) distribution, in which case you'd expect a decline in overall sales, not because of "piracy" but because of less inefficient bundling and physical manufacturing and distribution costs.

The IFPI also repeats the BPI's misreading of the "Kantar Worldpanel" data. That is, they highlight that many people who fileshare don't buy anything, but then leave out the people who neither fileshare nor buy any music, thus setting up an apples and oranges comparison. They also cite the debunked HADOPI study, despite the fact that reports have already explained how the impact observed in that study likely had more to do with the introduction of new iPhones rather than HADOPI's three strikes policies.

But, really, the most ridiculous argument in the IFPI response is at the end:

The fundamental problem of the music
market place remains as true as ever: why pay for music when you can get it illegally free?

The fact that they still believe this to be true is the real problem with the legacy industry in one simple sentence. They still think the only way to compete is on price. That's clearly not true, as seen by the IFPI's own data, which consistently shows that massive numbers of people buy all the time, even when they can get it quite easily for free from unauthorized sources. As noted above, it's really about convenience -- which is a result of a combination of factors, of which price is merely one. Creating more authorized services that provide greater convenience than unauthorized sites is the most effective way to fight back. If the IFPI actually focused on providing more value, rather than freaking out every time piracy was detected, we'd be talking about what an amazing time it was for music today, rather than having this same silly debate all over again.

In the end, despite the IFPI's whining, these two studies do add valuable data to the debate. And while they may appear to conflict, I don't think they really do. The results both make sense in context, and viewed from a wider angle they suggest, still, that the best way to respond to unauthorized file sharing is to make authorized service more convenient.

Reader Comments

Haven't I seen that somewhere before?

"The fundamental problem of the music market place remains as true as ever: why pay for music when you can get it illegally free?"

Hmm, I think I did...

Ah yes, here it is...

"Bill Gates voiced his dissatisfaction with this argument in his now legendary bitchfest "The Open Letter To Hobbyists." The pre-billionaire Gates pointed out that for some reason, everybody knew not to steal a computer, but considered software free for the taking (he complained that they earned less than $2 an hour for their work on the software, because so few people paid for it). If this continues, Gates argued, why will anybody write software?

Pirates were undeterred. It didn't take long for hackers to work out ways to trade warez electronically: Early transactions were made through bulletin board systems. These worked similar to the way the modern Internet works... if you had to directly call up each website with your modem and politely request every byte with a cordial handwritten note.

So, decades later, in an industry where piracy is still rampant and yet a fair amount of software still seems to get written, what became of the major anti-piracy advocates? Well, let's refer back to that earliest and most vocal detractor: Bill Gates.

He now admits that piracy of its biggest product has actually expanded its market in countries like China, going so far as to say: "As long as they are going to steal it, we want them to steal ours."

Why, if it wasn't for piracy of basic software, Bill Gates might have a steady job instead of being filthy rich."

Fundamental problems

The fundamental problem of the music market place remains as true as ever: why pay for music when you can get it illegally free?

That's —almost— a really good question.

I remain convinced that music will continue as a part of human culture no matter what happens within the copyright regime. Music has existed since long before any notion of copyright—and will remain a vital part of human experience long after current copyright notions have been scrapped.

So why should society bear the costs of a monopoly? We don't need to pay the price of a monopoly in order to gain the societal benefit: The musicians will create music with or without the monopoly. So granting the monopoly looks like society is just overpaying.

Now, if society wasn't being gouged, perhaps we could live with a slight overpayment. Something along the lines of a generous tip. But there's big a difference between a generous gratuity and a massive overcharge.

Re: Fundamental problems

There are numerous answers to that first question. Unfortunately for the labels, a lot of it has to do with services rather than simply selling copies of the music. The music will still be created and shared without their help, it's just that people will be paying $10/month for a service rather than paying $10/CD like they used to have to. People will still buy other things from the industry, maybe make a snap purchase here and there, but the sea change is already happening.

There's still plenty of ways to make money, but it requires innovation and not restricting your industry to merely sell copies of something. Once again, offering a service less valuable and useful to your potential customer is going to harm you - you have to offer better for people to pay. As Spotify and other services prove, they will - you just might not get as rich off that as you might have done 20 years ago.

Re: Re: Fundamental problems

People will still buy other things from the industry

Why should an industry based upon distributing plastic discs to brick-and-mortar buildings continue to exist in any form?

Why shouldn't we just say that the vinyl record, and then later on the CD were peculiar artifacts of the twentieth century —and now human culture has moved on to new technogy— and let the old industry die.

Music will still exist. Whether or not it's a twentieth-century industrialized, mass endeavor.

Re: Fundamental problems

The fundamental problem of the music market place remains as true as ever: why pay for music when you can get it illegally free?

Fans like an artists works, so fans give money to artist so that they will produce more works. The more direct the relationship between artists and fans, the fewer fans needed for the artist to make a living. The latter point is the problem faced by the labels, they are not needed to manage the production of records and CDs.

Did you stay up all night writing these fall-back pieces?

Well, to begin with: there's actually NO relevant historical data before the internet. Purchasing a cassette or VCR tape and then enduring a 1:1 time ratio to copy it is QUITE different from being able to just click and have it flow.

BUT MAINLY, as I've written several times: the industry CANNOT survive if piracy goes unchecked. You even tacitly admit that by urging them to ease distribution and lower prices.

SO let's just agree that PIRACY IS BAD.

Now, what to do? Well, legalities are proceeding: 6 Strikes looks likely to be effective. Let's cheer that on.

Meanwhile, personally, all you pirates should reform. -- In that line, by the way, did you know that the fellow who "Amazing Grace" was something of a literal pirate before reforming? So it's possible to turn from your nasty little habit of filching other people's work.

Take a loopy tour of Techdirt.com! You always end up same place!http://techdirt.com/What are you stoopid pirates doing here? Mike supports copyright!04:22:31[f-485-4]

Re: Did you stay up all night writing these fall-back pieces?

Re: Did you stay up all night writing these fall-back pieces?

"I've wrote it, multiple times at that, therefore agree with me"? That's the best you've got?

What I find effective about six strikes is that after having its funding cut, HADOPI managed to send out more letters. Newsflash - when someone manages to serve you more when he's being paid less, it means you're getting gypped. It's also extremely telling that the few cases dragged to court caught the wrong people. It's only effective if you don't give a shit where you grab your pound of flesh from - which you don't, which in turn should set a lot of alarm bells ringing. You're demanding the equivalent of imprisoning every male on the planet indefinitely because "males are rapists". (Yeah, I went there, because that's such a favourite topic du jour for you antipiracy Prenda fanboys.)

And once again, loopy boy - if Masnick supports copyright, then what the fuck are you ranting about?

Re: Did you stay up all night writing these fall-back pieces?

Re: Re: Did you stay up all night writing these fall-back pieces?

I was actually at a meeting with several network and studio guys and asked them about it. So far, they are pleased. No data on sales but the early sign is that people rate taking heed of first notifications and there is a drop in infringing activity. Maybe they'll commission Floor 64 to do a study? I'll ask.

Re: Re: Re: Did you stay up all night writing these fall-back pieces?

A drop in infringing activity does not mean sales will increase correspondingly, though.

Not buying is the same as pirating in that regard.

Even if there should be a small uptick in sales, is that worth the time, effort, money, ill-will, or resulting apathy created by repeatedly making any potential buyers feel like they're criminals for being interested in your product?

Re: Re: Re: Did you stay up all night writing these fall-back pieces?

Even assuming they were correct, they seem to be missing a word:

'...the early sign is that people rate taking heed of first notifications and there is a drop in detectable infringing activity.'

Of course even then it's a moot point, as the question they should should be interested in isn't 'is infringement down?', but rather 'are sales up?', because for a business, it doesn't matter in the least if the answer to the first is 'yes', if the answer to the second is 'no'.

Re: Did you stay up all night writing these fall-back pieces?

1) Yes, however piracy existed people borrowed and shared. Is your point here that it didn't matter because it wasn't as easy to find out about?

2) Most of us don't want the "Industry" to survive. The industry has done little to further the cause of music rather it serves to line the pockets of a few executives and a shortlist of top "artists".
We do however want real artists to survive which is why we buy their songs, go to their concerts and most importantly share them with others.

3) No. Example: My CD is scratched and will not play. I'm pirating a replacement.
Very few people will consider this "BAD".

4) 6 strikes may be effective... at stripping peoples rights away and allowing more corporate and government intrusions into our lives. It may even stop people pirating but that won't convert into sales. From the damn article:

Creating more authorized services that provide greater convenience than unauthorized sites is the most effective way to fight back.

Sorry friend but if you consider guilty until proven innocent a success you need to move, maybe Saudi Arabia?

Re: Did you stay up all night writing these fall-back pieces?

"Well, to begin with: there's actually NO relevant historical data before the internet. Purchasing a cassette or VCR tape and then enduring a 1:1 time ratio to copy it is QUITE different from being able to just click and have it flow."

If you are talking morality (as you are prone to do) then the copying of tapes to tapes and CDs to tapes is very relevant. When it comes to infringement and the morality of such activity, the scale of infringement is what is irrelevant.

Re: Did you stay up all night writing these fall-back pieces?

Well thats quite a laugh considering that if the founders of Hollywood did not commit piracy ie commit copyright infringement in the first place then Hollywood would never have been born. So for you to say that Piracy is bad when Hollywood was founded by committing copyright infringement in the first place Hollywood your and Hollywood themselves are in no position to say that Piracy is hurting them when they committed piracy in the first place if they didn't they wouldn't have existed.

Re: Did you stay up all night writing these fall-back pieces?

"the industry CANNOT survive if piracy goes unchecked"

Which industry are you referring to exactly?

The music and movie industries are making record profits. The distribution industry is not.

I can't agree with you that this is inherently bad though. The distribution for the music and movie industries has been revolutionized by the internet, and the old distribution model is obsolete. If the businesses built around the old distribution model fail to adapt to new technology, new businesses will spring up to take their place... and that is a good thing.

Re: Did you stay up all night writing these fall-back pieces?

BUT MAINLY, as we've written several (hundred) times: the industry CANNOT survive if their business model goes unchanged.

Over 80% of an album's production cost (writing, recording, mastering, and advertising) is going to the 10 songs that no one really wants (if you split it up into strict percentages). How can an industry hope to survive with this kind of inefficiency built into their business model? Why should we care if an inefficient industry fails? This happens all the time, and is an indicator of a healthy market. And, really it's not the industry thats failing--it's the product. The recording industry has only one product--the album. Their entire business model is based on the creation, production, and distribution of the album (at this point in time, the CD). Fewer and fewer people want albums--they want digital singles. To save their industry, all they have to do is stop wasting their resources producing what people don't want (the album) in favor of what they do (the digital single).

Report Validity

The points I made here are sufficient to cast severe doubt on the conclusions of the first report. Having looked at the report again I must call it a classic example of lying with statistics.
The EU report on the other hand does support their conclusions, and is supported by other music industry practices, such as Payola. They are able to say that the same people who used downloads and streaming services went on to buy a number song that was a percentage of thoose they tried.

Re: Report Validity

The points I made here are sufficient to cast severe doubt on the conclusions of the first report. Having looked at the report again I must call it a classic example of lying with statistics

I'm not convinced of that. Looking at your 3 points.

1) It compares short periods before and after the shut-down, rather than the same periods from previous years. The adjustment for Christmas sales is a red herring to lend credibility to the study. Comparing similar period from different years means seasonal adjustment is not necessary.

I'm not sure that matters, since the real comparison is cross-country, not over time.

2) Unknown studios, therefore film release history and popularity not known, and this is a significant factor in sales.

This is possibly an issue, but since they indicate that it's from two major studios, the performance levels should be more or less representative.

3) Because of the above, not able to allow for different popularity in different countries. Films do not do equally well in all countries.

That is possibly true, but I'm not sure that would explain the variations in data shown. That is, it's possible, but it would represent one hell of a coincidence to get the data they got because of regional variations. You would have to have a few very improbable things all happen at once.

Again, that report is not perfect, but it's not clearly "lying with statistics" either.

Re: Re: Report Validity

The comparison are all to some extent apples to oranges. Seasonal variations, or film releases can account for the upswing, so without a previous years data and film release dates no conclusions can be drawn.Also with film, both variations in tastes and windowed releases have an effect on sales, so the cross country comparison is not like with like.

While the shape of the graph suggest that the Mega shut-down cause an increase in sales, it could just be a seasonal effect. Without graphs from previous years seasonal effects cannot be eliminated. A before and after comparison should be across years, not just from a short periods with the event in the middle.
An alternative would be sales graphs for a fixed period, some from before, some from after and some from spanning the shut-down. The before and after should have similar shapes, on the assumption that improvement in sales was consistent, but the spanning graph should show and increase after the shut-down.
I am saying that the chosen data is not sufficient to support their conclusions, lacking proper like for like comparisons. It has the smell of being cherry picked to support the conclusion they wanted.

Re: Re: Re: Report Validity

The comparison are all to some extent apples to oranges. Seasonal variations, or film releases can account for the upswing

Neither seasonal variations or film releases are likely to account for the variations at all, since the comparison is cross country, which face the same seasonal variations and releases for the most part.

Also with film, both variations in tastes and windowed releases have an effect on sales, so the cross country comparison is not like with like.

Possibly, but you'd have to show evidence of serious differences between those countries AND would then have to explain why there was a change *at the same time* as the Megaupload shut down. Just saying, it's really not the way you're saying it is.

While the shape of the graph suggest that the Mega shut-down cause an increase in sales, it could just be a seasonal effect

No, it can't. The graph actually shows an overall *decrease* in sales (note the negative numbers). But an increase in sales *relative* to those other countries.

Without graphs from previous years seasonal effects cannot be eliminated

Yes, they can, because all of the countries face the same basic seasonal effects.

A before and after comparison should be across years, not just from a short periods with the event in the middle.

You're ignoring what this study is actually about.

Anyway, look, I'm surprised about the results, but that's no excuse for misrepresenting the reality of the study itself.

Re: Re: Re: Re: Report Validity

As less than a years worth of data was used, there is no way of distinguishing seasonal effects from those due to the shut down. Their claimed improvement could happen every year at the same time.
Their is a correlation between Mega usage and the variations in the trends between countries. This could be as much from economic factors, or availability of legal services.
The report is drawing conclusions from a limited data set, and missing the obvious comparison set, data from previous years. A data set from a single time period cannot reliably be used to show that an event had an effect in seasonally variable data, unless the event had a dramatic effect. There is no drama in this data set.
This is a useful report for political purposes, but very suspect from a statistical validity point of view. A more detailed look at individual films as suggested above,over a year, or comparison with previous years data is required to make the conclusions more compelling. Either could show a difference in graphs that associate with the shut-down event.
A conspiracy theorist could even suggest that the shut-down was timed to fit the natural sales trends to appear to be effective.

A tale of two wallets

I have a friend that torrents movies, if he watches it all the way through we buys the dvd. He has the largest wall of dvds iv seen in someones house. when he wants to watch the movie he watches the torrent, so that he dosent have to bother with finding the disk and the anti-picricy warnings. (most of his dvds are still plastic wrapped)

from the industries pov I am a good consumer. I actively avoid anything illegal, torrents streaming etc. and i have an 8th of the dvds.

Industry Changes

RIAA and MPAA are pining for the days when there was effectively one distribution channel - retail sales of physical disks or tapes. Those days are long gone. Many people prefer to obtain music and videos electronically and "install" the download on multiple devices (at least for music). Thus, they must move to where the customers are and provide the desired services. There is nothing magical either adapt or die.

Re: Industry Changes

While music is so much a part of human experience and culture that I cannot imagine a (human) society without it—cinema hangs on a more precarious cliff.

To be sure, the theatre is thousands of years old. And I suspect that pantomime and drama extends much farther back into the very dawn of pre-history. Play-acting may be almost as human as a sense of rhythym and harmony. Still, in a very definite way, the movies are a product of their technology. Divorced from live theatre. And dependent on amassing capital for production.

I am not quite so confident in their long-term survival going forward, post-industrially.

Re: Re: Industry Changes

Obviously music will survive, but the question is will the labels survive. I see a trend where artists can contract for services, such as sound mixing and digital distribution, without having to sell their copyright. The labels could be put out of business because alternatives will give artists a better deal, and increasing competition from artists that go more or less direct to fans.
Cinema will survive, but probably with significant changes. Costs of production have dropped significantly, with green screen allowing much simpler and cruder sets. While behind music in the Internet revolution, Independent production is becoming more and more viable. Again, it is the studio as publishers that are liable to disappear, as the Internet allow more co-operative and distributed production. Kickstarter and the like will enable funding, though probably not the massive up front payments to 'stars'.
In both cases I think the publishers who rely on obtaining the rights are the ones in trouble. The same also applies to books, the publisher as an arbitrator for access to production facilities is largely no longer needed.
In all creative work their will be a range of options for creators, from supporting themselves by normal work, to fan and crowd funding, along with personal appearance, speaking engagements, concerts etc. In general the technology for production is affordable.

One thing I honestly don't get about Hollywood, well mainstream getting all up in arms about this thing is the fact that last year box office was UP with record numbers.

These blockbuster movies by major cinema companies of course and not just indie films, but its pretty clear movie theaters aren't going to be dying anytime soon and even before last year streaming sales/digital purchases were making up for the slacking DVD/Bluray sales.

So Hollywood's argument that they're losing money due to piracy really isn't an open and shut case after all.

Yes. I'm living proof of it. Can I honestly say I've never downloaded anything I would've purchased otherwise? No. Can I honestly say downloading something made me a fan of it leading me to spend money on it and/or other stuff from the same source when I otherwise wouldn't have? No.

'the best way to respond to unauthorized file sharing is to make authorized service more convenient'

which is the last thing any of the entertainment industries will admit to and the last thing any of them will do. using the falsehoods that they put out, that their bought and paid for politicians and law makers are given so as to increase present laws and introduce new ones, is the way they always go. it isn't anything to do with anything else other than control. once they have stopped file sharing, taken control of the internet and can treat customers as they have until now, ie, restrict what is given, when, how, what format, the speed and where, torrent will be the poodles plums of services and the industries will be on it like a rash!!

There are lots of things that you can get for free that you pay for

"The fundamental problem of the music market place remains as true as ever: why pay for music when you can get it illegally free? "

There are lots of things that have free alternatives that we commonly pay for. Water is one of the more obvious ones. I can get water for free (or essentially for free) from the tap, but I regularly pay for bottled water. EscapePod is free, but I contribute money occassionally to help them keep producing the next episode.

The fundamental problem of the music market place remains as true as ever: why pay for music when you can get it illegally free?

This isn't a ridiculous argument at all. Let's take out the legality part and ask the question: why would people pay for music if they can get it for free?

When I was a kid, we would swap tapes all the time I had a dual-cassette boombox, and for the price of a 90 minute blank tape, I could copy two albums. And people swapped tapes all the time; while someone in my social group actually had to buy an album the first time, we all ended up with a copy at some point.

The thing is, we didn't realize that this was actually illegal. We didn't even think about the legality of it... until the anti-piracy groups started pushing back. Even then, ironically enough, it was the software anti-piracy that got my attention, not the efforts of the music industry.

So this argument is entirely correct: if people can get content for free (both guilt free and money free), there's no reason to expect they'll pay for it.

However, over the last 15 years or so, the industry has steadily increased people's awareness of Copyright and that it's wrong to copy movies, music, and software without permission.

Giving people the unlimited ability to copy content, as facilitated by today's technology, would certainly ruin the business of today's music and movie business.

True, a lot of music is written for art's sake, but a lot of musicians and songwriters would not be nearly as prolific if they had to go work at a day job.

Re:

This isn't a ridiculous argument at all. Let's take out the legality part and ask the question: why would people pay for music if they can get it for free?

There's a long list of possible reasons why.

1. Because it's more convenient
2. Because they want to support the artist
3. Because it makes them feel good
4. Because it comes bundled with other stuff they want
5. Because it guarantees a level of quality
6. Because it creates a chain of responsibility
etc. etc. etc.

Will that convince everyone? No. But it sure as hell appears to convince an awful lot of people.

So this argument is entirely correct: if people can get content for free (both guilt free and money free), there's no reason to expect they'll pay for it.

Re: Re:

..and Amazon and eMusic and Pandora and Rhapsody and rdio and... oh wait, those are just the countries they're allowed to service, which aren't all the same countries mentioned in the studies. Carry on ;)

We never gave these things a second thought as to their legality. My family and friends all did this and we all shared amongst each other. My sister and I were too young to have a job, had no money (other than small sums of gift money) with which to buy music, so we obtained it the only way we could, using the sources above.

What our copying above did do is get us interested in music such that when we finally got old enough to get jobs of our own, we then took to actually purchasing music ourselves. Copying still continued (when has it ever stopped?), but casual copying has definitely made paying customers out of my family.

My story isn't much different from yours. The notion that people won't pay for something that they can otherwise get for free isn't as clear-cut as you think is.

Re: Re:

Well, it certainly hasn't stopped in the decades since 1992, when the Audio Home Recording Act added § 1008 to Title 17. That section of the current copyright act provides:

No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.

(Emphasis added.)

As the Wikipedia article notes, the Senate reported that “this provision was intended to ‘conclusively ... resolve’ the debate over audio home taping” and the two House reports stated, first, "in the case of home taping, the exemption protects all noncommercial copying by consumers of digital and analog recordings," and second,"In short, the reported legislation [Section 1008] would clearly establish that consumers cannot be sued for making analog or digital audio copies for private noncommercial use."

All the same, I note that the parent poster seems quite confident that this activity is somehow illegal (tomxp411: “The thing is, we didn't realize that this was actually illegal.”). Perhaps y'all have been educated that way.

Edumacated to disrespect the law, even when you're not actually breaking it. . . . Isn't that a high price for a civilized society to pay?